Master data exists everywhere in your company. This includes all non-transactional, numerical, and verbal data attributes that describe business objects such as products, personnel, locations, holdings, suppliers, customers, raw materials, and other business objects. By consolidating these attributes into central, relevant, and correct master data records (so-called golden records), these business objects, which typically change rarely, can be uniquely identified and described. – This covers the theory and definition of the term. What matters most is what happens in your company on a daily basis.
Since master data forms the basis for all operational processes, tasks, and activities in your company, its quality is crucial for efficiency in your business areas and ultimately for your business success. The quality of master data is determined by how well the master data meet the information needs of specific requirements and tasks. The smaller your information gap is, the better your master data quality is, leading to more efficient and error-free business processes and operations.
Why this is the case is shown by the following three areas in your company:
1. Operational Business Processes, Products, and Services
Regardless of whether your company manufactures and sells products, services, or both, they always rely on master data. These business objects are described and defined by fundamental numerical and verbal information, such as product numbers, components, raw materials, scope of performance, and other specific details. These are used for manufacturing, purchasing, storage, sales, billing, and other operational activities. This makes it clear that the quality of master data actually influences all operational business areas. The poorer your master data quality, the more time-consuming, inefficient, and risky the subsequent operational activities are. In purchasing and sales, this can lead to incorrect billing or faulty quotation. The associated error identification and rectification is usually time-consuming, and in the worst case, financial losses are also involved. For products and services, the consequences are even more severe as it typically involves product liability and warranty. Since these defects and errors typically occur with a time delay, they are particularly serious. The time and effort to identify and rectify the cause is enormous, as are the financial losses and consequential damages due to the impact on the company’s image.
2. Ditalization of Business Processes and Areas
Nowadays, no industry or company is exempt from the progressive advancement of digitalization. Good examples of this are time tracking, payroll processing, and invoice approval. These operational activities are based on employee master data, including details such as name, employee number, job title, type of contract, department affiliation, hierarchy level, contract type, and various other descriptive and identifying information. These master data are essential for accurate time tracking and proper payroll processing.
If the underlying employee master data is incorrect or incomplete, overtime may not be recorded and billed correctly, or employees may suddenly receive too little or too much salary. In such cases, poor master data quality always leads to chaos and dissatisfied employees who may eventually lose trust in your company. A similar situation arises with invoice approval when the process suddenly halts because no substitute is defined, no one knows who is next in line, or simply the successor is unknown. If this goes unnoticed, you may incur penalty fees, and in the worst-case scenario, one of your suppliers might withdraw. The consequences are diverse, involving financial losses, significant time consumption, and damage to your reputation.
3. Strategic and Operational Decisions
Even in operational and strategic decisions, your Master Data plays a crucial role. As an example, let’s consider the master data of the product bill of materials and the spare parts list, as well as a specific qualification of your production employees. Due to potential supply shortages, it was decided to increase the stock quantities of a specific component. This part is required for both manufacturing and as a spare part. However, some items of this component are missing in the lists provided by product management. Therefore, the increase in stock quantity is underestimated. When an actual supply shortage occurs, the decision must be made whether to fulfill spare part deliveries to existing customers or temporarily halt the production of affected products. In either case, you end up with dissatisfied customers, financial losses, and your company suffers significant damage to its reputation. A similar situation arises when planning production for the next year and anticipating an increase in sales volume.
However, this requires employees in production with a very specific qualification. According to personnel management, you should be able to cover the production increase with the current workforce. As luck would have it, your sales flourish, but it turns out shortly afterward that you cannot increase production because you lack the necessary skilled workers. An employee’s qualification was mistakenly entered and an error occurred during manual data consolidation and analysis. Once again, the same unpleasant and far-reaching consequences as in the previous example arise.
All of this and much more can be prevented and avoided with consistently high master data quality. What you need for this is easily explained: our Master Data Management with the constantly available, complete, historical, and current 360° view of your business areas.
With this, you have the high-quality Master Data required for operational and strategic decisions. Your operational business processes, products, services, and digitalization also benefit from it. Besides, you unlock the full information potential of your master data and gain deep insights into your business areas. It sounds simple and it is.
You don’t need to be an IT or data expert to work with our multi-domain master data management. We follow a No-Code approach and provide you with a user-friendly, intuitive web interface to store, manage, and share all master data in your company.
